We have issued a revised set of scenarios to reflect the progression of the pandemic. Global spread has increased, and containment efforts around the world are mixed. In countries that have responded quickly and forcefully, lockdowns are being tightened and extended; few countries at the moment are putting firm dates on their containment and mitigation measures. We are seeing challenges to capacity in the security environment and within political systems. At the same time, we also now see scenarios describing an exit from the crisis.
Scenario 1/ Seasonal disruption - EXITED
- Infections fall in China but accelerate outside China. Global pandemic peaks in May 2020.
- Disruption of production and supply chains remains significant in Q2; recovery starts late Q2/early Q3.
- Supply chains/transport links recover in Q4; 10-15% of supply chains permanently dislocated.
- Major events disrupted until containment achieved.
- Global growth slows significantly (0.5-1.0%)
- Security situation remains stable, law enforcement under pressure.
- Governments in Italy, Iran under pressure.
Scenario 2/ Prolonged disruption
- Outside China, pandemic spreads widely and globally. Containment efforts mixed.
- Concerns arise of a second wave when quarantines ease.
- Movement of people across borders de facto suspended globally.
- Goods flow, but with major logistical challenges. By Q3 2020, majority of supply chains need repair.
- Global economy enters recession.
- Deteriorating security environment in some places.
- Acute political challenges increase as the economic effects of COVID-19 restrictions is felt by economies and societies.
Scenario 3/ Uneven rebound
- Developed markets bring pandemic under control; developing markets remain deep in crisis.
- Lockdowns relax, in stages, in developed markets. Mobility severely restricted elsewhere.
- Security situation worsens in developing markets; foreigners and foreign companies targeted.
- Global economy remains in recession; improvement forecast for Q4.
- On-shoring of supply chains brings political fragmentation and protectionism. Supply and demand markets fail to meet.
- Geopolitical consequences are significant; inter-state tensions rise.
Scenario 4/ Global rebound
- Pandemic brought broadly under control and/or WHO announces end of pandemic status. Vaccine is developed.
- Restrictions on movement of people and goods gradually relax globally. Supply chains, transport links are restored.
- Business operations resume gradually.
- Global GDP rebounds in Q4. Global growth averaging 4.4% forecast for 2021.
- Political risks remain elevated. Rivalry resumes and intensifies between the US ad China; international cooperation is fraught.
- Security risks remain elevated until all economies resume growth and employment levels normalise.